This Forum & Dissenting Opinions of the HBPP

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Greg
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Re: This Forum & Dissenting Opinions of the HBPP

Post by Greg » Fri Dec 04, 2015 7:59 am

MachineGhost wrote:
Greg wrote: I work for the federal government. It's easy to get my job done and lurk on the forum.
That was a great opening... but I'll be nice. ;)
Now I'm curious as to what you were going to say when you'd be your true self. I'm a big kid, I can take it. :)

It's actually one of the reasons I'm not a huge fan of my job, because it is a job I'm not really having growth in and isn't challenging me to be better.
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Re: This Forum & Dissenting Opinions of the HBPP

Post by drumminj » Fri Dec 04, 2015 10:04 am

Greg wrote: It's actually one of the reasons I'm not a huge fan of my job, because it is a job I'm not really having growth in and isn't challenging me to be better.
I'll let MG make the quips (have to say it felt like an opening to me as well), but I can definitely relate to this.  I worked a job for a year where I could just feel my brain atrophying.  Rather than solving engineering problems, I was pushing pixels around on flash timelines (I'm a software developer). 

I don't regret taking the job, as it got me out of my comfort zone and made me comfortable with pursuing other opportunities, but I wish I had moved on sooner.  Best of luck with your situation!
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Re: This Forum & Dissenting Opinions of the HBPP

Post by Reub » Fri Dec 04, 2015 10:59 am

Greg wrote:
MachineGhost wrote:
Greg wrote: I work for the federal government. It's easy to get my job done and lurk on the forum.
That was a great opening... but I'll be nice. ;)
Now I'm curious as to what you were going to say when you'd be your true self. I'm a big kid, I can take it. :)

It's actually one of the reasons I'm not a huge fan of my job, because it is a job I'm not really having growth in and isn't challenging me to be better.
It sounds like you have a typical govt job, Greg. The lack of productivity is outrageous and so are the costs as paid for by taxpayers. Their general lack of real work is only exceeded by their arrogance. Of course, I was the exception in my 30 years as an air traffic controller.  ;)

I would actually suggest keeping your federal no show job and looking  to start a real one on the side, ergo the best of both worlds!
Last edited by Reub on Fri Dec 04, 2015 11:54 am, edited 1 time in total.
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Re: This Forum & Dissenting Opinions of the HBPP

Post by Greg » Fri Dec 04, 2015 11:07 am

Reub wrote:
Greg wrote:
MachineGhost wrote: That was a great opening... but I'll be nice. ;)
Now I'm curious as to what you were going to say when you'd be your true self. I'm a big kid, I can take it. :)

It's actually one of the reasons I'm not a huge fan of my job, because it is a job I'm not really having growth in and isn't challenging me to be better.
It sounds that you have a typical govt job, Greg. The lack of productivity is outrageous and so are the costs as paid for by taxpayers. Their general lack of real work is only exceeded by their arrogance. Of course, I was the exception in my 30 years as an air traffic controller.  ;)

I would actually suggest keeping your federal no show job and looking  to start a real one on the side, ergo the best of both worlds!
That's exactly what I've done Reub. When you're up and out after 40 hours every week (and not an hour more!), then I go home and work either with my engineering consulting company I founded or work on my pet-projects of this powered exoskeleton I like.
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Re: This Forum & Dissenting Opinions of the HBPP

Post by Reub » Fri Dec 04, 2015 11:57 am

We even had one manager who started a company and sold things to the Federal Aviation Administration which held his other job. I doubt that it was legal but they even promoted him after they found out what was going on.
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Re: This Forum & Dissenting Opinions of the HBPP

Post by MachineGhost » Fri Dec 04, 2015 11:00 pm

Getting back on topic, the number of weeks the orthodox PP has had a negative sequence of returns is 107.6.  Let's round it up to 108 for dollar cost averaging purposes.  So if you had $100K to plow into the PP, set up autodeposits (and autoinvestment) for $925.93 every week until you are fully invested.  You can sleep at night with this one, budd!

Also, I just noticed that rebalancing annually is actually riskier in terms of MaxDD than using the close equivalent of 30/20 bands.  However, the P2T backtester uses absolute not relative percentage bands, so I cannot test them out on the Risk Parity PP which is stuck with annually (it does beat the orthodox PP rebalanced annually).  The best bands in terms of reward vs risk for the orthodox PP is actually 40/10 not 35/15: 8.98% CAGR, -19.83% MaxDD.  I believe that if we were able to optimize the band percentages used, we would arrive at superior end results.

BTW, the Risk Parity PP outperformance over the orthodox PP is only marginal (<.50% CAGR, several percent less MaxDD).  Is it worth the trouble?  I think it depends on how much gold's unbalanced risk contribution bothers you and whether or not you want the ability to construct a PP portfolio with a specific risk target in mind.  It certainly makes the most sense if you're going to dump cash and do the three assets for higher growth, especially if leveraged.  It could also make a difference between transaction fees eating away too much terminal wealth and not.

However, given the difficulty of knowing exactly which bands to use with the Risk Parity PP and the inferiorness of annual rebalancing vs bands, I will defer to the available data at the moment and not speculate. ::)
Last edited by MachineGhost on Sat Dec 05, 2015 12:00 am, edited 1 time in total.
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Re: This Forum & Dissenting Opinions of the HBPP

Post by finster869 » Sat Dec 05, 2015 5:49 am

MachineGhost wrote:

Also, I just noticed that rebalancing annually is actually riskier in terms of MaxDD than using the close equivalent of 30/20 bands.  However, the P2T backtester uses absolute not relative percentage bands, so I cannot test them out on the Risk Parity PP which is stuck with annually (it does beat the orthodox PP rebalanced annually).  The best bands in terms of reward vs risk for the orthodox PP is actually 40/10 not 35/15: 8.98% CAGR, -19.83% MaxDD.  I believe that if we were able to optimize the band percentages used, we would arrive at superior end results.

MG- Are you considering new deposits in your band analysis that 40/10 affords better historic returns than 35/15?  If so, how are the new deposits being deposited: (1) placed in cash until the band is hit then reallocated; (2) 25% to each asset class; (3) at the existing percentage of each individual asset class in relation to the entire portfolio; (4) some other manner.

Thanks!
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Re: This Forum & Dissenting Opinions of the HBPP

Post by MachineGhost » Sat Dec 05, 2015 12:39 pm

finster869 wrote: MG- Are you considering new deposits in your band analysis that 40/10 affords better historic returns than 35/15?  If so, how are the new deposits being deposited: (1) placed in cash until the band is hit then reallocated; (2) 25% to each asset class; (3) at the existing percentage of each individual asset class in relation to the entire portfolio; (4) some other manner.
I wondered about that too but the P2T backtester is not that sophisticated.  Even after all these years, I'm still waiting for software or code that can do settable relative percent bands for portfolio rebalancings.  The PP just gets no respect from anyone.  Very frustrating.

Sophie did an analysis on the best way to deal with new deposits.  Search for it.

EDIT: Here's sophie's post: http://gyroscopicinvesting.com/forum/pe ... /#msg35628
Last edited by MachineGhost on Sat Dec 05, 2015 4:56 pm, edited 1 time in total.
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Re: This Forum & Dissenting Opinions of the HBPP

Post by vnatale » Wed Jan 22, 2020 10:51 pm

MachineGhost wrote:
Wed Dec 02, 2015 2:05 pm
jafs wrote: But, given that their approach is likely to be trying to move things in the opposite direction, it's hard to understand how a combination of that plus the stagflation results in ongoing/exacerbated stagflation.
The Fed was clueless in the 1970's.  You're still operating under some assumption that they knew what they were doing.  Arthur Burns royally screwed up through neglect, then the disastrous Monetarism experiment poured gasoline onto the flames of "baked in the cake" inflation and then Volcker via Regean finally came in and set everyone's head straight by jacking up the FFR to nearly 20% and reeling in fiscal policy.

Read this so you get the full overview of the different explanations for stagflation from different schools of economic thought (not all are correct but most are): https://en.wikipedia.org/wiki/Stagflation#Causes
But if the economy sucks, there's no way that employers can just keep paying employees more money - they'll undoubtedly wind up laying people off instead.
Human behavior is wired in such a way in terms of envy that rising prices induces people to spend and hoard, other people notice this activity and spend and hoard also, repeat, and all this spending and hoarding makes people think All Is Well from the dopamine boost.  This is how New Keynesianism views "stimulating the economy".  It's a drug fix.  Throw in guaranteed wage increases each year and its very easy to mask a stagnant economy if you personally feel like you're not the one losing out.  People are also slow to react to higher inflation because they don't think in real terms, only nominal.  Frog in boiling water syndrome.  If you still don't understand, I pass the torch to someone else.
Still reading through this Topic so do not know if this was addressed.....but I do believe that CARTER brought in Volcker.

Vinny
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Re: This Forum & Dissenting Opinions of the HBPP

Post by vnatale » Wed Jan 22, 2020 10:57 pm

bigamish wrote:
Thu Dec 03, 2015 1:01 pm
Cortopassi wrote: PS,

Your previous thread comment:

If you want to live off your investments, you just need a shitload of money.

Is 100% correct.  That was always my goal in being too risky for the first 20 years of investing, and getting absolutely freaking nowhere.  Now that I am older, with one child a couple years from college and another one 4 years after that, and at most ideally only 15 working years left, I am 180 degrees polar opposite of what you are saying about yourself become less risk averse.  As my net worth grows, I am much more risk averse. 

I see three cases --

1) Shitload of money.  Then you are right, and I would have been more than happy to have it all in a 5% money market (not possible now or in the foreseeable future)
2) Not enough money to live carefree.  Mentally I am able to deal with that, if it ends up being the case.  Live day to day and do what you can.
3) Somewhere in the middle.  This is ME right now and scares the crap out of me. I want the pendulum to swing to #1, but with things the way they are with the PP and my aversion to too high of a stock concentration, my retirement situation can go either way.  The unknown is the most scary part.
Pointedstick wrote: Yes, I agree, Corto. The stage when you have between 5 and 25x expenses is the scary one. You're working toward financial independence, but you're not there yet, and every loss or down year sets back your goal…

For me a bug focus has been on controlling costs. I think you and I have different feelings about college, but if you're going crazy trying to figure out how to spend half a million dollars to send your kids to top-tier schools, I could see how that's stressful. But there are alternatives, I promise! You can beat the system! And I think college is overrated anyway. It's over in four years and even if you have a very negative college experience like I did, you'll probably be just fine if your head is screwed on straight and you have a loving family.
sophie wrote: Yup, agree with PS.  Use the PP to build a base of money that will be the most dependable lifeline you can possibly have:  minimized risk of painful drawdowns, plenty of cash to draw on for emergencies, built-in protection against several Black Swan events, and built-in asset management.  This is more dependable than a job or any government benefits you can think of.  Perfect it is not, because there's no such thing, but it's pretty darn close.

Once you have that, you can now go out and take risks that you might otherwise not have.  You can quit your job, start your own business, put new savings into higher yielding but riskier investments, spend money on something you might have hesitated on in the past, etc.  Or just wake up in the morning and feel like you don't need to pander to your boss or take on more work than you really want to.

PS I get the idea that you're pretty close to FIRE - what will you do when you get there?  I figure I'm about 3 years away, but since I'm highly unlikely to lose my job in that 3 years I'm already enjoying some of the above benefits.  Corto - you'll get there soon enough!

And incidentally, who says the PP has "done nothing" for the past two years?  It was negative in 2013 and will be slightly negative this year, probably, but mine was up 9% in 2014.  It's definitely trailed my stock/bond retirement portfolios, but just wait for that next market crash.
This is one of the best sequences of posts I've seen in awhile.  I hope the new PPers take note.  For many of us (myself included) it really is about the long game, staying the course, saving profusely, and reaching your FIRE goals in as safe a manner as possible.  Then afterwards having the financial freedom to get fancy should one choose to do so.

I now return to my lurker hibernaculum.
Another post worthy of being resurrected.

Vinny
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Re: This Forum & Dissenting Opinions of the HBPP

Post by vnatale » Wed Jan 22, 2020 11:05 pm

Greg wrote:
Thu Dec 03, 2015 9:13 pm
dualstow wrote:
Greg wrote: I work for the federal government. It's easy to get my job done and lurk on the forum.
Because of your sig, I always pictured you in some private robotics lab, something like the Batcave.
That's my home life where I'm working on building my own exoskeleton for the paralyzed that I'd like to put on kickstarter in a year or two.

The government job happened due to a longer story of trying to find funding for grad school, ignorance, contracts with huge termination fees, and lack of information from the people offering me a job after I graduated.
Looks like Greg has been fairly inactive here for the last two to three years. Anyone know if he ever did the above?

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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